In its recently published annual sustainability study, MIT Sloan disclosed that a growing number of companies are turning to collaborations — with suppliers, NGOs, industry alliances, governments, even competitors — to become more sustainable.
Entitled “Joining Forces: Collaboration and Leadership in Sustainability,” the study focuses on the critical role of sustainability collaborations that address systemic issues, and on the role of the board of directors in guiding their companies’ sustainability efforts.
Specifically, the researchers wanted to learn how companies manage collaborations in order to achieve their green goals as environmental issues become more complex and urgent.
Sustainability Grows in Importance
To provide deeper insights into the report, MIT Sloan sponsored a webinar, “How Collaboration Advances Your Sustainability Efforts.” Knut Haanaes, senior partner and managing director in BCG’s Geneva office, and David Kiron, executive editor of MIT SMR’s Big Ideas Initiative, expanded upon key findings of the research, including the factors that are making sustainability initiatives successful in business and what’s not working.
Collected over six years, the global data set indicates that sustainability as a business issue is increasing in importance as well as moving toward strategic and transformational initiatives. The number of companies that list sustainability as a top management agenda item jumped from 46% in 2010 to 65% in 2014.
Some 39% percent of respondents say their companies publicly report their sustainability efforts, a 15% increase over the past four years. Most notably, companies that have not made the business case for sustainability have declined dramatically from 42% to 23%.
Companies aren’t doing it alone. To achieve the most potent results, companies are turning to collaborators.
Is Collaboration Necessary?
While collaboration is not always simple, it is crucial in achieving long-term sustainability. Ninety percent of respondents agree that businesses need to collaborate to address the sustainability challenges they face.
If collaboration is done correctly, it can be incredibly positive for production and market transformation.
The motivation to collaborate is rooted in good business practices, including maintaining a positive reputation, acquiring talent, and increasing company innovation.
However, despite the near consensus on the need to collaborate, less than half of businesses engage in sustainability partnerships even when most have proven to be successful. While collaborations are complex and there is no one size fits all model, MIT Sloan shared a number of tips and identifiers for successful partnerships:
- A shared language – establishing understanding and shared values in sustainability
- Timely engagement – beginning with stakeholders who may play a more important role and then fade away for others to grab the ball
- People – having the right stakeholders in the room who know how to manage and express their needs.
- Due diligence – establishing trust and overcoming concerns before moving forward
- Strategic entrance and exit strategies – understanding the right time to leave — collaborative partners don’t need to stick around forever.
- Effective internal collaboration – promoting strong internal efforts to external collaboration initiatives
- Practice – practicing and experience is a major contributor to success
- Board engagement – securing an active board is a predictor of a successful collaboration
Get the Board Around a Green Table
Lack of engagement by the Board of Directors is a severe roadblock to sustainability, said respondents. The research showed that 86% agree boards should play a strong role in sustainability. The question is, are they? The short answer is, no, at least not enough.
The survey results show that only 22% of managers perceive that their boards provide substantial oversight on sustainability issues.
Only 42% report that their boards are substantially engaged in sustainability, while at the same time, 15% of respondents don’t even know if their board is engaged at all – either it is not being communicated, or not being communicated adequately.
According to the webinar presenters, commitment from boards would have the most significant impact and market transformation in sustainability. Companies whose board is engaged in sustainability collaborations prove to be twice as likely to be successful in their efforts. So how do we get boards interested and engaged in sustainability issues in the future?
David Kiron identified that one of the most prevalent but maneuverable barriers is the idea of “short termism” in the boardroom. Board directors are often focused on their fiduciary responsibility to support their shareholders and provide strong quarterly returns. He said that if we can create an environment that focuses less on the short term and more on the long term, holistic outcomes, then boards just might get on board.
How can we get that conversation started and get boards better informed? One solution is to assemble an external advisory council. Their specific insights can be potentially influential in helping to shape sustainability throughout a company’s business plan.
Collaboration Will Pave the Road to Innovation
In summary, Haanaes and Kiron confirmed that sustainability is a top management agenda item gaining momentum. The overwhelming consensus that businesses should collaborate on sustainability is a promising sign. However, boards are still an untapped resource, and their increased involvement in the future would have a profound effect on sustainability initiatives.
So, are we moving fast enough? Knowing the resources available to us but still underutilized, we could pick up the pace, but we are moving in the right direction. Collaborative relationships will lead to new innovations. These should spark the interest and involvement of top management and the Board of Directors, accelerating the numbers of successful collaborations and achieving greater sustainability in business.